Within estimates. Dayang's 1HFY12 net profit came in within our and consensus expectations, with annualised net profit accounting for 49.3% of our and 49.9% of consensus full year estimates. The company recorded an improvement in both revenue (+53.2% q-o-q and 4.1% y-o-y) and net profit (+99.5% q-o-q and 15.0% y-o-y), underpinned by a higher fleet utilisation rate and additional revenue from the charter of its new workboat, Dayang Topaz. There was also an increase in its marine charter business, which commands a higher profit margin. EBIT margins in 1HFY12 remained stable compared to 1HFY11 probably due to the company's improvement in project delivery.

First interim dividend. In tandem with the release of its 1HFY12 results, Dayang also declared a first interim dividend of five sen, representing 50% of our full year dividend forecast of 10 sen, which is based on our assumption of a 58% payout ratio.

Order book remains strong at RM1.2bn. The company's current order book stands at some RM1.2bn and this will last its business until 2016. At the same time, the company is expected to obtain more brownfield services tenders as most of the existing projects in the field are due for renewal this year. As highlighted in our previous report, we expect the company to tender for jobs worth RM7bn this year.

Maintain BUY. The company recently published its annual report for 2011 so we are taking the opportunity to update our FY11 numbers retrospectively to reflect the changes. While we make no adjustments to our earnings estimates, we are revising our FV upwards to RM2.75 (previously RM2.26) as we roll over valuations to FY13. The FV is based on Dayang's PE of 13x FY13 EPS. We continue to like Dayang's solid business model, which provides the company with recurring income and a constant cash flow.

Source: OSK